Senate Chair Takes on FTC in Net Neutrality Fight

A Senate subcommittee chairman tangled with the Federal Trade Commission (FTC) Wednesday, calling into question the agency's hands-off approach to Internet regulation. The issue is polarizing a number of Washington agencies.

"We're headed toward a circumstance where big providers that have a lot of muscle will set up different lanes and freeways" over the Internet and provide quicker download times or site access for those willing to pay for it, said Sen. Byron Dorgan, D-S.D., chairman of the Senate interstate commerce, trade and tourism subcommittee.

"We're concerned that regulating prematurely and perhaps on such a broad basis really could serve to squelch this market in a way that's harmful to consumers," responded FTC Chairman Deborah Platt Majoras, who appeared before the panel to discuss her agency's annual re-authorization.

At issue is the topic of net neutrality, which essentially guarantees equal online access so that every Web site on the Internet, whether it is a major company's portal or a homemade storefront, has the same right to speed and access. Some major Internet service providers, however, have called for a system that would allow for tiered, rate-based access.

Chairman Dorgan in January introduced a bill intended to preserve net neutrality, but it is currently stalled in the Senate Commerce Committee. The FTC weighed in on the issue earlier this summer with a report that urged Congress to "proceed with caution" when crafting legislation that addresses broadband Internet access.

Majoras asked her staff to craft the report after she was unable to find adequate public information on net neutrality, she told the subcommittee Wednesday. Discussions with dozens of stakeholders as well as several public hearings led the FTC to conclude that "legislators should exercise caution because there's so much that we don't know about what's happening in this marketplace," Majoras said.

Majoras was skeptical that Internet discrimination is on the horizon, but was doubtful that, should a tiered system emerge, it would necessarily be harmful to consumers. Regulating the Internet "will prevent business models from developing," according to Majoras.

Dorgan disagreed, pointing to the entrepreneurs behind Google. "Would two guys in a dorm room have access to consumers in X, Y or Z city if big interests" demanded an Internet toll to reach certain Web users, he asked. "We created this Internet system through innovation [and] if we get to a point where we say now there's no non-discrimination rules," consumers could miss key aspects of the online experience, he said.

Majoras was not convinced. Because the Internet is "so dynamic", there's no way a provider like Verizon will be able to successfully quash online access without a backlash, she said. "There will be a cry like no tomorrow" if consumers are cut off and providers will "lose a lot of customers," Majoras said. "I can't imagine consumers tolerating not getting the content that they want."

Chris Murray, senior counsel with the Consumers Union, questioned where these aggrieved customers might go. "I live two miles south of the White House and [have the] choice of one provider," he said. "I can't get a cable modem in my neighborhood. When I hear that 90 percent of consumers have a choice [with ISPs], I find that difficult to believe when here I am in downtown D.C., in a relatively affluent neighborhood, and I don't have the choice."

Murray also pointed to the difficulty in policing discriminatory practices by ISPs.

He cited the case of Madison River, an Internet telephony provider that in 2005 blocked its customers from accessing a competing VoIP provider and was ordered to pay $15,000 in damages. While the June FTC report found that such incidents were infrequent and unlikely to be repeated, Murray said Wednesday that the Madison River case was uncovered by "sheer, dumb luck", so craftier ISPs could certainly engage in discriminatory practices undetected.

One of Madison River's customers happened to be a network engineer, so he called the company and Madison River admitted over the telephone to blocking the other VoIP provider's service, Murray said. "That [scenario] is not going to repeat itself," he said. Additional violations will be "incredibly hard to document."

Majoras acknowledged that there might be a time "when some new rules might be necessary, but there could be some unintended consequences."

"There are certain types of content to require faster speeds" to operate effectively, Majoras said. "If you don't prioritize things like movies or VoIP over things that you don't need as quickly, you're going to lose functions in the short term."

"Majoras is dead-wrong in her example," said Mark Cooper, director of research for the Consumer Federation of America. ISPs are not talking about ensuring quicker consumer access to movies online, they're talking about giving themselves a leg up on the competition via controlled access, Cooper said.

"The FTC and the [Department of Justice] have cheered the decision FCC to allow a cozy duopoly to come into existence, claiming that two [providers are] enough," Cooper said. Meanwhile, the U.S. "dribbles out bandwidth at 10 to 20 times what people pay around the world" while the nation's broadband penetration rate continues to fall behind that of other countries, he said.

"The nations that have passed us have relied on the very policy that we used 30 years ago  to provide innovation and consumer friendly services," Cooper concluded.

The Justice Department last week submitted a filing to the FCC in opposition to net neutrality, echoing the FTC's sentiments that regulation would hinder the continued growth of the Internet. The FCC stepped into the net neutrality debate in March and opened a public comment period that concluded June 15. It is unknown, however, if these comments will ever lead to new FCC rules.

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In a related action, the Internet advocacy group Free Press on Wednesday submitted a Freedom of Information Act request to uncover why DOJ submitted its comments regarding net neutrality several months after the FCC's comment period had closed.

"We want to know if the Bush administration's lawyers reached out to any of the thousands of groups, businesses or individuals who support net neutrality, or if they only talked to industry lobbyists at AT&T and Verizon," Marvin Ammori, the general counsel of Free Press, said in a statement.

Chloe Albanesius has been with PCMag.com since April 2007, most recently as Executive Editor for News and Features. Prior to that, she worked for a year covering financial IT on Wall Street for Incisive Media. From 2002 to 2005, Chloe covered technology policy for The National Journal's Technology Daily in Washington, DC. She has held internships at NBC's Meet the Press, washingtonpost.com, the Tate Gallery press office in London, Roll Call, and Congressional Quarterly. She graduated with a bachelor's degree in journalism from American University...
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